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AVAX India's largest agricultural warehousing company uses the Avalanche blockchain to promote the digitalization of agricultural finance
India's largest agricultural warehousing company has taken an important step towards the digital transformation of agricultural finance. Arya.ag is using the Avalanche blockchain to tokenize grain deposits, warehouse receipts and loan status, providing lenders with a more reliable way to verify crop mortgages.
Nandan Nilekani, co-founder of Indian technology giant Infosys and head of India's Aadhaar ID Systems project, announced the initiative at the Global Fintech Festival in Mumbai. Arya.ag is building a dedicated Layer-1 blockchain based on Avalanche technology and plans to open the network to other warehousing companies in the future.
System operating mechanism
Electronic warehouse receipts allow farmers and agribusiness to borrow money using goods stored in warehouses as collateral, rather than selling them immediately after harvest. According to Arya.ag and Ava Labs, the system aims to provide lenders with a shared record that clearly shows the type of grain stored, ownership, whether it has been pledged as collateral, and outstanding debt.
Finternet will integrate farmer, commodity, warehousing and insurance information into what Sanmesh Kalyanpur, director of Finternet Labs, calls a "composite token" for banks to use when assessing mortgage risk. Another organization called Finternet is helping develop communication rules between the system and warehouses and lenders. Finternet provides a digital infrastructure that connects global funds and assets, a concept co-proposed by Nilekani and Agustín Carstens, former general manager of the Bank for International Settlements and former governor of the Central Bank of Mexico.
Indian law has recognized electronic transferable warehouse receipts (e-NWRs) as certificates to regulate crop loans in warehouses. This blockchain deployment is an extension of the existing legal framework rather than establishing new grain ownership claims.
Testing of tokenized e-NWRs was officially launched earlier this year, with three major banks joining the dedicated Avalanche Layer-1 network.
Scale and considerations
Arya.ag stores approximately US$2 billion of agricultural products in its warehousing network and supports approximately US$1.26 billion in loans annually. Its credit arm Arya Dhan issues approximately US$230 million in loans annually. It should be noted that these data describe the existing business scale of Arya.ag and do not represent the amount of assets or loans that have been linked.
The current focus is on improving the infrastructure behind warehouse receipt mortgages rather than claiming to have a specific impact on credit access. As the system is deployed, faster approval speeds, lower costs and greater credit availability are seen as potential outcomes.
In 2024, the Indian government launched a credit guarantee scheme of Rs 10 billion to encourage financing activities for electronic transferable warehouse receipts, especially for small and marginal farmers.
Finternet Labs was co-founded by Aadhaar architect Pramod Varma and CEO Siddharth Shetty, with the support of technology industry veteran Nandan Nilekani.@ The finternet_org initiative oversees communication rules between lenders and warehouses on the @Avaxnetwork network.
